EVALUATION OF INTERNAL CONTROL SYSTEM IN OIL AND GAS COMPANIES: A CASE STUDY IN TOTAL ETHIOPIA S.C

Abstract

Oil and gas are considered among the world's most important resources. As oil and gas companies engaged in extended process are complex in nature, it requires strong internal control system. In addition current business trends have made it imperative for almost all large organizations to maintain an internal control system. The basic objective of the research paper is to evaluate the effectiveness of internal control in Total Ethiopia S.C. due to allegation in the company related to loss of huge value of company’s inventory item and fraud exercised by some of employees. The study used purposive sampling techniques, questioners and interviews as a primary data collection tool and different document of the company, literature & research documents were used as a secondary data. The data gathered was analyzed and interpreted by the help of percentages, frequency tables mean and standard deviation using SPSS software. Relevant literatures to the study were also considered. The finding of the study revealed that the overall effectiveness of internal control in the organization could not be described as very strong but rather satisfactory and need improvement. Particularly the monitoring component of internal control is poor in the organization. Though Risk Assessment is better in the organization, there is inadequate control environment, control activities and inadequate flow of information and communication in the organization. The recommendations drawn from the study was that,the. company should selects, develops, and performs ongoing and/or separate evaluations on business process to ascertain whether the components of internal control are present and functioning and those internal control deficiencies should be communicated to parties responsible for taking corrective action. But in order to do so, the organization should increase the number of auditors, as the number of auditor is currently only one which is the audit manager.